The Iowa Legislature created the Military Service Member Homeownership Assistance Program (MHOA) in 2005 to help eligible armed forces service members purchase a primary residence in Iowa. The program provides up to $5,000 that may be used toward down payment on a qualifying home purchase and/or closing costs on a qualifying first purchase money mortgage. The Iowa Finance Authority (IFA) administers the program.
Eligible home buyers: The program is available to service members who at the time of applying for a grant under the program:
- Have served 90 days active duty since September 11, 2001 (other than training);
- Is a federal status injured service person having served in active duty since September 11, 2001; or
- Is a surviving spouse of said eligible service person, all who have served honorably.
AND
- Is purchasing a qualified home;
- Utilizes an IFA Participating Lender (if financing the purchase); and
- Uses IFA’s FirstHome or FirstHome Plus program, if eligible. Or if not eligible for FirstHome or firstHome Plus, uses a permanent mortgage loan for financing the purchase.
Qualifying homes: A home is eligible under this program if it:
- Is located in the state of Iowa
- Is purchased by the eligible service member as the service member’s primary residence
- Falls into one of the following categories
- Single-family residences (including “stick-built” homes, modular homes, or manufactured homes, provided the home is attached to a permanent foundation and is taxed as real estate);
- Condominiums;
- Townhomes; or
- Duplexes, if one of the units will be the primary residence of the service member.
Participating lenders: Participating lenders are lenders who participate and originate FirstHome mortgages in IFA’s FirstHome and FirstHome Plus program. There are more than 100 participating lenders with more than 200 office locations around the state.
Application process: The loan and grant application process under the program is as follows:
If financing the purchase transaction:
- The service member contacts an IFA Participating Lender and works with that lender to a submit a qualifying loan application. A qualifying loan application is one for a property which the service member has a bona fide purchase agreement. A qualifying application is for a FirstHome or FirstHome Plus mortgage if the service member and co-applicants are eligible for the FirstHome or FirstHome Plus mortgage. Or if not eligible for FirstHome or FirstHome Plus, a permanent mortgage loan (amortized payments and a minimum five year term).
- With the loan application, the service member works with the Participating Lender to complete grant application and provides required forms to determine eligibility. Typical forms usually needed to establish military service include a copy of a valid DD Form 214, four months of leave and earnings statements, or other documentation satisfactory to the Iowa Department of Veteran’s Affairs and government issued photo ID.
- The Participating Lender transmits copies of the loan application, the military service documentation, and the grant application to IFA. IFA requests the grant application packet two weeks prior to the needed approval date and stresses that under rare circumstances may the approval be issued in less than one week. IFA must receive, review and approve all grant applications prior to purchase closing. Upon confirmation of military service member eligibility from the appropriate Military Office and IFA’s review of the application, IFA shall notify the participating lender that the grant application has been approved. The “approval period” shall be up to 60 days for completion of purchase on an existing or completed property and up to 120 days for properties under construction/renovation. (Application requests with purchase closing dates that exceed the applicable 60 or 120 days will not be accepted for reviewed by IFA until within the 60 or 120 days.)
- A Title Guaranty Certificate is required to ensure clear title for all transactions. With the Lender’s Certificate, the service member may request a free Owner’s Certificate that will protect the service member’s interest in the property title, even after he/she sells the home.
- All service members and co-buyers must execute the Military Grant Agreement and Certification to certify primary residency, which shows an understanding that this is a one-time grant and that grant funds may be used only for down payment and/or closing costs relevant to the purchase. The Participating Lender advances funds at closing in an amount equal to the amount of the grant on behalf of the eligible service member. The advanced funds are applied toward closing costs and/or the down payment. The Participating Lender shall show the Military Grant as a borrower credit on the HUD I Settlement Statement.
- IFA will reimburse the Participating Lender post-closing of the qualified home purchase and mortgage loan. (The reimbursement will not be for cash back to the borrower in excess of borrower out-of-pocket earnest money, application fee or hazard insurance. Ineligible amounts will be deducted from the reimbursement request.) Within 30 days of closing, the Participating Lender must submit the request for reimbursement with all required forms pursuant to the request for reimbursement form. Typical forms for reimbursement include Military Grant Agreement and Certification; a copy of the complete HUD-1 Settlement Statement with signatures of buyer, seller, and lender/closing firm; a certified copy of the warranty deed; evidence of Title Guaranty Certificate; certified true copies of note and mortgage if the loan was not a FirstHome mortgage; and any other documentation requested with approval. IFA encourages lenders to order Title Guaranty’s Rapid Certificate that may be received within two after closing.
If cash financing the purchase transaction:
- The service member shall submit a bona fide purchase agreement to IFA and request a grant application form.
- The service member shall complete the grant application and provide the required forms to determine eligibility directly to IFA. The forms usually needed to establish military service include a copy of a valid DD Form 214, four months of leave and earnings statements, or other documentation satisfactory to the Iowa Department of Veteran’s Affairs and government issued photo ID. (The grant application request form provides specific information about necessary documentation.) IFA requests the grant application packet two weeks prior needed approval date and stresses that under rare circumstances may the approval be issued in less than one week. IFA must receive, review and approve all grant applications prior to purchase closing.
- Upon confirmation of military service member eligibility from the appropriate Military Office and IFA’s review of the application, IFA shall notify the service member that the grant application has been approved. The “approval period” shall be up to 60 days for completion of purchase on an existing or completed property and up to 120 days for properties under construction/renovation. (Application with purchase closing dates that exceed the applicable 60 or 120 days will not be accepted for reviewed by IFA until within the 60 or 120 days.)
- A Title Guaranty Owner’s Certificate is required to ensure clear title for all transactions.
- All service members and co-buyers must execute the Military Grant Agreement and Certification to certify primary residency, which shows an understanding that this is a one-time grant and that grant funds may be used only for down payment and/or closing costs relevant to the purchase.
- The service member must advance his/her own funds for the “cash closing” purchase. IFA reimburses the service member post-closing of the qualified home purchase. Within 30 days following closing the service member must submit the request for reimbursement and all required forms pursuant to the request for reimbursement form. Typical forms for reimbursement include Military Grant Agreement and Certification; a copy of the complete HUD-1 Settlement Statement with signatures of buyer, seller, and closing agent/attorney; a certified copy of the warranty deed; evidence of Title Guaranty Certificate; and any other documentation requested with approval.
Program restrictions and limitations
All grants under the program are subject to funding availability. Grants are awarded in the order in which completed grant applications are received. Grants awarded pursuant to the program are personal to their recipients and may not be assigned. Only one grant shall be awarded per home purchase. An eligible service member shall receive only one grant award under the program.
To learn more about the Military Service Member Homeownership Assistance Program, send an email or call 800.432.7230.
The above article was found on the The Iowa Fiance Authority website. Click here to view the article.
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